Reports: AMA supports legislation against 'pay-for-delay' deals

By Alaric DeArment

NEW YORK — The American Medical Association has come out in favor of legislation to stop deals between branded and generic drug makers that critics blame for delaying entry of generics into the market, according to published reports.

Forbes reported that the AMA would support federal legislation to ban so-called "pay-for-delay" settlements. The AMA joins the Federal Trade Commission, which has strongly criticized the settlements

Typically, when a generic drug company wants to be the first to market a generic version of a drug, it will file for Food and Drug Administration approval for it before the branded drug has lost patent protection. This usually prompts a lawsuit from the branded drug company, and while the suits often go to trial, in many cases, they will result in a settlement that allows the generic drug maker to launch at a later date.

While the "pay" part of the deal may be monetary, it frequently consists of a promise on the part of the branded drug maker not to market an authorized generic — essentially the branded drug marketed at a discount under its generic name, usually by a third-party company — during the 180-day market exclusivity period to which generic companies are entitled if they are the first to win approval for a generic, when they have the sole right to compete against the branded version.

According to the Generic Pharmaceutical Association, a trade group, the settlements usually result in the generic drug becoming available ahead of patent expiration, and delaying entry beyond the expiration would be illegal.